Juanita Cid
Partner, Kreston Lentink
Audit regulations driving change in 2024
November 19, 2024
Audit regulations driving change in 2024 are in rapid transformation, caused by regulatory changes, technological advancements and client demands. Understanding these changes can help organisations prepare for the future and ensure compliance while maximising value from their audits. For more insights on the evolving audit landscape, read the original article by Juanita Cid in AB Magazine, or the summary below.
Rebuilding trust
Global regulatory frameworks are evolving in response to high-profile financial failures, such as the Enron collapse and the 2007–08 financial crisis. These events highlighted the need for greater transparency and accountability in corporate reporting. For mid-market firms, audits are now subject to stricter oversight and require adherence to more rigorous standards.
For businesses operating across borders, regulatory consistency is crucial. Governments and regulators are working to harmonise standards internationally, simplifying compliance for organisations with global operations. This alignment reduces complexity but also pressures companies to adapt their practices to meet new requirements.
The rise of ESG and integrated reporting
Environmental, social, and governance (ESG) reporting has become a key focus for regulators and stakeholders alike. Increasingly, companies are required to disclose their ESG impacts, with frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD) setting new benchmarks for transparency.
Integrated reporting, which combines financial and non-financial data, is gaining momentum. For mid-market businesses, this represents an opportunity to demonstrate their long-term value and commitment to sustainability. However, compliance with these evolving standards will require investment in reporting capabilities and robust data collection processes.
New standards and the digital imperative
The introduction of standards like ISSA 5000, designed to enhance the reliability of sustainability reporting, demands significant adaptation from auditors. Mid-market companies may need to collaborate more closely with audit firms to ensure their methodologies align with these new requirements.
In addition, digital transformation is critical. Advanced technologies such as artificial intelligence and data analytics are revolutionising the audit process, enabling firms to provide deeper insights and more accurate assessments. For businesses, this shift can lead to more efficient audits that deliver greater strategic value. Investing in digital tools and aligning with forward-thinking audit partners will be key to navigating this new landscape.
Talent and workplace culture
The audit profession is grappling with a talent shortage, a challenge exacerbated by rising workloads and heightened expectations. For mid-market businesses, this could impact the availability and cost of quality audit services. To mitigate this, firms are focusing on creating engaging workplace cultures, offering professional development, and promoting work-life balance to attract top talent.
Embracing change
For mid-market organisations, these challenges also represent opportunities. Collaborating with audit firms that are committed to innovation and adapting to regulatory changes can provide businesses with a competitive advantage. By staying ahead of the curve, companies can ensure compliance, enhance their reputation, and build stronger relationships with stakeholders.
The future of audit is dynamic and complex, but it is also rich with potential for those willing to embrace change.
If you would like to speak to one of our experts about your next audit, please get in touch.
